Market Wrap: Cryptos Down, Stocks Up; Altcoins Underperform

Most cryptocurrencies traded lower on Thursday, briefly decoupling from the rise in stock prices.

Bitcoin (BTC) continued to struggle below $30,000 and is down by 2% over the past week. The cryptocurrency has been stuck in a choppy trading range over the past two weeks, suggesting minor stabilization after a sharp sell-off earlier this month.

Meanwhile, the S&P 500 pared earlier losses, rising from oversold levels. Still, despite short-term variations, the 90-day correlation between bitcoin and stocks remains at an all-time high.

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Alternative cryptos (altcoins) underperformed bitcoin on Thursday, indicating a lower appetite for risk among crypto traders. For example, ether (ETH) declined by 6% over the past 24 hours, compared with BTC’s flat performance over the same period. Avalanche’s AVAX token and Cosmos’ ATOM token dipped by 10% on Thursday.

Typically, during down markets, altcoins decline more than bitcoin because of their higher risk profile.

Latest prices

Uptick in long liquidations

There was a slight uptick in BTC long liquidations over the past 24 hours, which occurred after the cryptocurrency declined toward $28,000 earlier in the New York trading day.

Still, the rise in long liquidations on Thursday was low compared with the recent peak earlier this month. Sometimes traders are forced to exit positions during times of high volatility, which can accelerate movements in the spot price.

Liquidations occur when an exchange forcefully closes a trader’s leveraged position as a safety mechanism due to a partial or total loss of the trader’s initial margin. That happens primarily in futures trading

Ether underperforms

Ether, the world’s second-largest crypto by market cap, extended its down move relative to bitcoin on Thursday.

The weekly chart below shows the ETH/BTC price ratio, which broke below its 40-week moving average. The ratio could face further downside, similar to what occurred during the 2018 crypto bear market. The next level of support is at 0.043.

Similarly, bitcoin’s market cap relative to the total crypto market cap (dominance ratio), accelerated its upward move. The ratio broke above a year-long downtrend earlier this month, which signaled risk-off conditions in the crypto market.

Altcoin roundup

• SOL and DOGE dip: Tokens of the Solana (SOL) and Dogecoin (DOGE) protocols dipped the most among the major cryptocurrencies even as bitcoin (BTC) remained mostly unchanged for most of the New York trading day. SOL lost as much as 8% over the past 24 hours amid a continual “risk-off” sentiment for major cryptocurrencies, while DOGE dropped by as much as 5% over the same period. Read more here.
• Tether enters Latin America: Tether on Thursday added to its roster of stablecoins, launching its MXNT token pegged to Mexico’s peso. The token will initially be supported in the Ethereum, Tron and Polyong blockchains, the company said. MXNT is Tether’s first foray into Latin America and joins the company’s other pegged coins — USDT (U.S. dollar), EURT (euro) and CNHT (China’s yuan). Mexico is “a prime location for the next Latin American crypto hub,” Tether said. Read more here.
• The latest DAO governance strife: Two prominent names in the play-to-earn scholarship space are at odds after members of the Merit Circle DAO (decentralized autonomous organization) put forward a proposal to refund an investment by Yield Guild Games because of what they deem as an insufficient amount of value added by YGG. Read more here.

Relevant insight

• Coinbase Has ‘Structural Advantage’ Over Competitors, Cowen Analyst Says: Stephen Glagola gave the crypto exchange an outperform rating and $85 price target.
• Fed Vice Chair Lael Brainard Says CBDC Could Coexist With Stablecoins: A well-designed central bank digital currency could complement stablecoins and cash, Brainard will tell the House Committee on Financial Services on Thursday.
• Binance’s Bahrain License Upgraded for More Crypto Services: Binance Bahrain was granted a preliminary license in December and full license in March.
• Portuguese Congress Rejects Two Bills Seeking to Tax Crypto: The proposals were submitted by two leftist parties. The government, which also seeks to apply taxes, hasn’t submitted a proposal so far.
• Paraguayan Bill Regulating Crypto Mining and Trading Moves Closer to Law: The legislation was approved with modifications in the country’s Chamber of Deputies and will now return to the Senate, which had passed it in December.

Other markets

Most digital assets in the CoinDesk 20 ended the day lower.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.